House GOP Proposes IRS Funding Cuts and Defunding Free Tax Filing System
House Republican appropriators are proposing to cut IRS funding and eliminate the free online tax filing system recently made permanent by the Treasury Department, which promised to expand it to additional states.
The latest financial services and general government (FSGG) bill from the House Appropriations Committee aims to “[prohibit] funds to be used for the IRS to create a government-run tax preparation software that Congress has not authorized.”
The proposal reduces IRS funding for 2025 by $2.2 billion compared to the fiscal year 2024 level, bringing it down to $10.1 billion, with a $2 billion cut specifically from enforcement funding.
FSGG Subcommittee Chair Rep. Dave Joyce (R-Ohio) stated on Monday that the bill “takes steps to prevent agencies like the IRS from unfairly targeting hardworking Americans.”
Democrats quickly criticized the proposed IRS funding cuts.
“If Republicans have the opportunity, they will deprive law-abiding taxpayers of the choice to file their taxes for free with the IRS’s new direct file program by shutting it down before it expands nationwide,” Senate Finance Committee Chair Ron Wyden (D-Ore.) said on Tuesday.
House Appropriations Committee ranking member Rep. Rosa Delauro (D-Conn.) remarked on Wednesday that the plan “includes approximately 80 new, problematic, or pointless policy riders.”
These proposed budget cuts follow an initial $80 billion funding boost for the IRS passed as part of Democrats’ 2022 Inflation Reduction Act (IRA), which Republicans have been steadily reducing through annual appropriations.
Republicans and Democrats agreed to cut around $20 billion of the $80 billion injection in last year’s deal to avert a U.S. debt default. For fiscal year 2023, Republicans secured a $275 million, or 2 percent, cut in IRS funding.
The debt ceiling deal reached last June slashed $1.4 billion in IRA funding immediately, with an agreement to take back $10 billion in each of fiscal 2024 and 2025. This agreement was later updated to reclaim the entire $20 billion in the current fiscal year.
By the end of last year, the IRS had spent about 5.6 percent of its total IRA funding, with only 1 percent of the enforcement budget, its largest component, allocated as of December 31.
Republicans voted to eliminate the IRS free online filing program as soon as they retook the House last year, but this move was blocked by Democratic control of the Senate.
